On the Daily chart, XAUUSD navigates within a head-and-shoulders pattern and rebounds from a crucial 2290 support zone. Further scenarios unfold:
If the price fails to surpass the support zone, it will likely lead to a rise toward the 2360 level;
However, breaching below the 2290 will indicate a decline to 2190 support.
XAG/USD: Silver Price May Fall More on Breach of Pivotal Supports
Near-term action remains in bearish mode and cracks first pivot at $28.65 (June 13 low), with pressure on nearby other key supports at $28.49 and $28.25 (Fibo 38.2% retracement of $26.00/$32.51/daily cloud base, respectively).
Sustained break below $28.65/49 triggers to generate bearish signal on completion of failure swing pattern on daily chart/breach of pivotal Fibo support), with extension below the base of thick daily Ichimoku cloud, to verify the signal.
This would open way for deeper drop and expose targets at $27.54 (Fibo 76.4%) and $26.98 (100DMA) in extension.
Technical picture is weakening on daily chart (10/20/55DMA’s in bearish setup / 14-d momentum in negative territory) however, deeply oversold stochastic warns that bears may face headwinds at key support zone.
Consolidation or limited correction likely to precede fresh push lower, with daily cloud top ($29.74), reinforced by daily Tenkan-sen, to cap upticks and keep bears in play.
Caution on lift above cloud top and psychological $30 barrier, which would sideline bears.
Real yields going to have a major impact on gold prices:
Rising inflation expectations and falling long-end bond yields have given a new shine to gold prices.
If real yields – nominal yields less inflation – continue to fall, gold prices will likely continue their rally.
In the XAU/USD Price Forecast 2021, our analyst expects the gold outlook to remain bullish in 2021 as central banks keep committed to supporting recovery.
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The weekly price chart below shows the U.S. Dollar Index printed a bullish candlestick last week, again making its highest weekly closing price in over one year. The price is showing short-term bullish momentum, and the price is of course above its levels from 3 and 6 months ago, which shows that the long-term bullish trend in the greenback is still valid. Notably, the price is now bumping into a very key resistance zone for the USD, shown in the price chart below at 12140/58. If the price can break and hold above 12158 next week, that could be a key long-term bullish breakout.
Thebest strategy in the Forex market over the coming week will probably be to look for long trades in commodities, or in long USD Forex trades.
EUR/USD
This major currency pair has been in along-term bearish trend since May,but with deep bullish retracements, making it difficult to trade. However, last week saw the price fall sharply, especially on Wednesday following the U.S. inflation data release. The week ended at a 15-month low closing price, and the price closed very near its low, which is a bearish sign.
This currency pair is likely to fall further over the coming days, with no key support levels above the $1.1400 area.
Traders do need to be careful with this currency pair to only trade short when the short-term momentum is bearish.
AUD/JPY
We had expected the level at 83.02 might act as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price action rejected this level with a large near-engulfing candlestickright at the end of last Wednesday’s Asian session (typically one of the best times to trade currency pairs involving Asian currencies such as these) marked by the up arrow in the price chart below.
The trade has so far given a maximum reward to risk ratio of about 4 to 1 based on the size of the entry candlestick structure.
GBP/JPY
The British pound initially tried to rally against the Japanese yen last week but gave back the gains to crash into the ¥152.50 level. This is an area that would continue to be very supportive, but it is worth noting that the British pound has struggled across the board. With the Bank of England now dovish, it should continue to weigh upon the pound in general. That being said, though, the GBP/JPY is likely to be a little bit more sluggish than some of the other British pound-related pairs, simply because the Japanese yen is so weak itself. I would anticipate that rallies are going to continue to be sold into as we try to get down to the ¥150 level.
USD/JPY
The US dollar had initially fallen pretty hard during the course of the week but found enough support underneath to turn things around and show signs of life again. We reached towards the crucial ¥112.50 level, but then turned around to rally quite significantly. By the end of the week, we ended up staying within the flagging pattern that we have been in for a while. At this point, I think this remains a “buy on the dips market” going forward. The ¥115 level above is a major resistance barrier that must be acknowledged. Anything above there could open up a longer-term “buy-and-hold” scenario.
GBP/CHF
The British pound initially tried to rally against the Swiss franc but gave back gains during the course of the week to close near the 1.2350 level. At this point, it looks like we are still trying to make a move towards 1.22 handle, so I like the idea of shorting this market on little rallies that show signs of exhaustion. Ultimately, if we can break down below the 1.22 handle, we could see a move towards 1.18 level.
Bottom Line
I see the best opportunities in the financial markets this weekaslikely to be short EUR/USD, and long USD/TRY and Wheat.
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The weekly price chart below shows the U.S. Dollar Index printed a bullish candlestick last week, making its highest weekly closing price in over one year. The price is showing weak short-term bullish momentum, and the price is of course above its levels from 3 and 6 months ago, which shows that the long-term bullish trend in the greenback is still valid. Thebest strategy in the Forex market over the coming week will probably be to look for long trades in stocks or commodities, or in long USD Forex trades.
GBP/USD
This major currency pair has been in a the long-term bearish trend since May,but with deep bullish retracements, making it difficult to trade. However, following the Bank of England’s slow reaction to changing monetary conditions last week, we saw a sharp drop ending inthe lowest weekly close here made in the last 10 months. Despite this, it should be noted that the price has not yet exceeded last week’s low, made at the support level of $1.3411.
If we get a daily (New York) close below $1.3411 – or ideally, below $1.3400 – we will probably see yet more downwards price movement, so there is likely to be a short trade opportunity here if this scenario plays out.
Traders do need to be careful to only trade short when the short-term momentum is bearish.
S&P 500 Index
After trading below its 100-day moving average just a few weeks ago, the major US stock index has been roaring ahead for the past five weeks, rising in value during this time by about 8%.The end of last week saw the price reach another new all-time high, after having traded above the round number at 4700 for the first time.
The weekly candlestick was solidly bullish and closed not far from the top of its price range. This, and the record high, are bullish signs.
The S&P 500 Index looks likely to remain a good potential buy.
NASDAQ 100 Index
After trading below its 100-day moving average just a few weeks ago, the major US technology stock index has been roaring ahead for the past five weeks, rising in value during this time by about 11%.Last week saw the price close at another new all-time high.
The weekly candlestick was solidly bullish and closed near the top of its price range. This, the above-average weekly price range, and the record high, are all bullish signs.
The NASDAQ 100 Index looks likely to be a good buy.
AUD/USD
We had expected the level at 0.7366 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price action rejected this level with a large bullishoutside barright at the start of last Friday’s New York / London overlap session (typically one of the best times to trade currency pairs) marked by the up arrow in the price chart below.
GBP/JPY
The British pound got absolutely crushed last week after the Bank of England decided not to taper its bond purchasing program.The pound fell all the way down towards the ¥153 level, which suggests that we probably are going to test the purple box that I have on the chart, which should be supportive. Between here and the ¥152 level, I would anticipate some type of bounce, and if we do get that bounce, I think it could be a nice buying opportunity. If we break down below the ¥152 level, then we go looking towards the ¥150 region.
EUR/USD
The euro was all over the place last week to form a bit of a neutral candlestick. I believe we will probably continue to see a lot of that sideways action, but if we turn around and break above the 1.16 level again, then I think the market may try to recover. This will be all about the US dollar, and not necessarily the euro itself. I do anticipate that the euro is going to be very noisy, and I think short-term traders will continue to bounce this thing around between 1.15 and 1.16 before making a much longer-term move.
Bottom Line
I see the best opportunities in the financial markets this weekaslikely to belong of the S&P 500 & NASDAQ 500 Indices in US dollar terms, and long USD/TRYand short GBP/USD following respective daily (New York) closes beyond the long-term high or low closing prices.
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The US dollar steadies over lower-than-expected initial jobless claims.
Sentiment remains upbeat, however, the pair is struggling to climb past the psychological level of 115.00, probably due to overextension. The RSI’s double top in the overbought area and bearish divergence suggests that the rally could be losing steam.
A breach below 113.90 would prompt weaker hands to exit, leading to a pullback towards 113.00. A rebound past the said resistance would send the price to March 2017’s high of 115.40.
XAGUSD to test critical ceiling
Silver stalls as the greenback reclaims some lost ground. The break above the round number of 24.00 indicates strong commitment from the buy-side.
The bulls are looking at the major resistance at 24.80 from the daily timeframe, as a breakout would end a five-month-long correction and pave the way for a bullish reversal.
However, an overbought RSI coupled with a bearish divergence suggests possible exhaustion in the run-up. 23.60 would be the first level to watch for if the price pulls lower in search of support.
SPX 500 tests all-time high
The S&P 500 flies high supported by better-than-expected third-quarter earnings. The index has reached the previous all-time high at 4550.
A breakout may trigger a runaway rally. Nonetheless, a repeatedly overbought RSI may cause a limited pullback as buyers take profit.
A drop below the immediate support at 4515 would pull the trigger. 4445 would be next as it coincides with the 38.2% Fibonacci retracement level of the October rally. The bulls are likely to buy the dips though after sentiment turns optimistic.
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An increase in the bulls’ momentum will push the price to $1,750 level and above the resistance level of just mentioned level may extend to the $1,830 and $1,873 resistance levels. In case the resistance level of $1,789 remains on hold, price may break down the support level of $1,750, and it may decrease to $1,717 and $1,680.
XAUUSD Market
Key levels:
Resistance levels: $1,789, $1,830, $1,873
Support levels: $1,750, $1,717, $1,680
XAUUSD Long-term Trend: Bearish
Gold is bearish on the long-term outlook. Gold has been under the sellers’ pressure since the beginning of September. The price reached the support level of $1,717 on 29 September in which the bears’ momentum could not break down the mentioned level. A bullish engulfing candle pattern emerged which confirms that the bulls are ready to push up the price. The bulls and the bears had low momentum in gold market last week. The US non-farm pay roll report triggered the sudden bullish movement towards the $1,789 resistance level. The bears opposed the price increase and the market closed at $1,750 price level.
The 9 periods EMA remains below the 21 periods EMA and Gold is trading in-between the two EMAs which indicate that the bears are still prevailing in the Gold market. An increase in the bulls’ momentum will push the price to $1,750 level and above the resistance level of just mentioned level may extend to the $1,830 and $1,873 resistance levels. In case the resistance level of $1,789 remains on hold, price may break down the support level of $1,750, and it may decrease to $1,717 and $1,680.
XAUUSD Medium-term Trend: Bearish
Gold is on the bearish movement on the 4-hour chart. The white metal was consolidating at $1,750 zone last week on the 4-hour chart. The price broke out of the consolidating mode during the US Non-farm payroll news. It moved towards the resistance level of $1,789. The bears would not allow it to reach the mark before it interrupted it and return the price to ranging movement zone.
The price is trading on the 9 periods EMA and 21 periods EMA as an indication of ranging market. However, the Relative Strength Index period 14 is at 50 levels with the signal line pointing down to indicate sell signal.
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